It’s really not a simple answer, so let’s start with a couple questions.
Are you local? In order to have a proper handle on properties, you need a presence nearby.
Do you have any experience? As we’ve mentioned previously, we’ve made plenty of mistakes, so we have the wisdom that comes from those.
What are your margins? If you have razor-thin margins, property management may not be a good fit for you. However, I think the more you look at it, the small percentage you pay a management company more than pays for itself in time and headaches.
Do you enjoy after-hours work? Remember Murphy’s law: if anything can go wrong, it will go wrong, and at the worst possible time.
I make a living managing property, and I even leave my rentals to our residential team. I like to think that I know what I don’t know. I am only one person, and I can only do so much. I just mean that time and energy are limited resources. And the more properties you have, the more problems you have to solve. It's the nature of the business.
All in all, if you’re local, have experience, and think you would benefit from managing your own property, I really have no problem with you managing your own property. When it comes down to it, you will more than likely do a very good job with your units. Maybe you don’t need property management.
You may still want property management. And honestly, we can work with you and your company to design a responsibility and fee structure to suit your exact needs. It doesn’t have to be all or none. Give us your biggest burdens and spend more of your time doing what you want to do. That's why we're here.
If you're interested, due to some feedback I received on this post, I asked ChatGPT to write in the form of William Faulkner about property management, and here is what it put together:
Broker, Dad, tennis player
I watched Kung Fu Panda this past weekend. In the film, you learn late in the movie that there is no secret ingredient to his father's 'secret ingredient' soup. That was the secret. Related, the 'dragon scroll' which supposedly gave the holder unlimited power, really had no content.
That's the moral of this story, and something important that I've learned from a decade in commercial real estate. The secret is that there is no secret sauce. We don't know exactly how to do this, but through almost a century of experience, we know what not to do. I think that's sort of the key to real estate, and maybe anything: never make the same mistake twice.
What have I learned? Roll the dice. Put your money where your mouth is. Play with other people's money. And learn from the mistakes of others.
What mistakes have I made? I've missed out on deals that I thought were marginal. I've been afraid to take on debt. Honestly, not listening to my dad's wisdom would be a big one. He's literally saying, "I've made that mistake before. Don't do that." And yet, I continue.
Bonus tip: Don't be afraid to make offers. We make offers all the time. Sight unseen. I don't want to waste my time or anyone else's. Add in your contract a walkthrough, and inspection, and any other contingencies to make yourself comfortable, but throw a number out there. Sometimes you'll be shocked by the results. "You miss 100% of the shots you don't take." -Michael Jordan.
What are your goals for 2023? Can we help you get there? Are you ready to take the plunge into commercial property? We'd love to discuss opportunities with you. Heck, we may even partner up with you.
Banker, realtor, truck-owner
The Hattiesburg commercial real estate market and the national market have been enhanced by the stock market woes. Market conditions were compounded by the Fed rate hikes, which begin in March of this year. Normally, the market conditions would negatively impact commercial real estate thus producing lower values. A somewhat unusual phenomenon has appeared to have happened, and the cap rates are lower than what would normally be expected, producing higher values. Our market values, in part, have remained high due to investors from out of market investing. By mid-year 2021, we began seeing investors from California, New York, and Texas looking to purchase real estate investments in our market.
Our market, by most measurements, is considered a third tier or greater market, which is not usually on most investors' radars. Good real estate investments are becoming more difficult to make the deals work. We are being influenced by these prospective investors that they are looking at many smaller markets due to higher taxes, cost of construction, ability to work at home, and high crime rates in larger cities. As a result, the Hattiesburg market has showed up on their radar which has increased the market activity in our area.
Many community banks are flush with capital, and are looking for safe investments. Thus, the interest rates charged by the local banks are in the 6.5%-7% range depending on the quality of the guarantors and their income.
In the London & Stetelman office, we have been a part of 1031 exchanges ranging from apartments and Dollar General stores with triple-net leases, to well-located office buildings. One of the consistent hot spots in retail property that we've assisted clients with is between Highway 49 and Interstate 59. We have sold three locations within the last six months and have a contract on another.
Broker, dad, chief marijuana dispensary locator
Medical marijuana has moved into the Pine Belt, and its influence has been dramatic in the commercial real estate industry. You've probably heard about it. Perhaps you voted on it. In the commercial real estate space, it's been constant for most of this year.
Our three noteworthy transactions (this month) will be used for medical cannabis. In fact, each of these properties has already received its license.
We have proudly helped locate several dispensaries in this market, and we had the unfortunate responsibility of telling many others that most of the locations in town had been spoken for. In this market, when you're 1000 feet from churches, day cares, and schools, plus 1500 feet from other dispensaries, you've quickly eliminated most of the town.
Regardless of your personal thoughts on it, the movement has begun. It will be interesting to see how it continues to shake up the retail market.
CEO, President, SIOR, MVP
Pandemic Panic: In March 2020, we, like many in the CRE industry had no idea what we were going to be facing in the next few days, weeks years when the world shut down. Although we were deemed “essential” we worked carefully and in slow motion not to harm staff, customers and clients. By the end of March still under shelter at home orders coming and going, we saw a glimmer of hope. We worked diligently and landed one of the largest distribution entities in the world in Hattiesburg……..Amazon took a building off West Pine St on 63rd Ave, also the Miss. ABC distribution contractor purchased a pair of industrial facilities off Highway 49 North and we shifted to more warehouse/distribution. Also residential rentals and inventory absorbed pretty quickly for both sale/lease properties. Other concentrations of real estate, i.e. office, retail etc. started to have a little demand and glimmer of hope and we are somewhat back to our new normal in all concentrations of CRE. We realized the retail shopping experience that many like cannot be replaced with ecommerce and certain items cannot be sent via a wire.
We noticed when the stock market corrected in 2020, we had an influx of institutional investors looking at smaller tertiary markets and started paying premium for multifamily property and other commercial real estate. They competed with our local investors and caused cap rates to decrease, therefore pricing escalated. We ran out of descent multifamily inventory quickly.
In spite of the rising interest rate environment, the cap rates are not keeping up and cap rates are slowly creeping up and not quite where buyers are totally comfortable.
Because of the typical buy/sell activity there is a lot of 1031 liquidity on the sidelines looking for replacement property and having to often stretch the scope of the search to a larger radius.
If you have commercial real estate you are considering selling, want to sell and leaseback your building or even sell your business and CRE or sale leaseback, please let one of commercial agents be aware.